Barefoot Investor Scott Pape reveals why you need to sell your home right now

Barefoot investor Scott Pape has brutal advice for those in mortgage stress – they may need to sell their homes.

The finance guru echoed the warning of Reserve Bank Governor Michele Bullock that ‘the small number of borrowers who can’t make ends meet’ may ‘ultimately make the difficult decision to sell their homes’. 

Mr Pape said he expected interest rates to remain ‘consistently higher’ than they have been in the last few years because the Reserve Bank ‘is focused on eliminating…. entrenched inflation’.

The cash rate is currently at 4.35 per cent – where it has sat since November last year. 

‘Too many people (and journalists!) have anchored their expectations to ultra-low interest rates,’ he wrote in his column for News Ltd.

‘It’s high time we pulled up that anchor and sailed into the sea of sustained higher rates.’

In his environment of higher rates, Mr Pape said some people just could not afford the home loans they had taken out.

‘If I had a dollar for every time I’d told people in financial stress that they need to consider selling their home, I could rent a house in Ouyen (for a week),’ he wrote.   

In backing the Reserve Bank, Mr Pape had a swipe at Treasurer Jim Chalmers.

‘In the past few weeks the Treasurer has thrown a little bit of inner Karen at the Reserve Bank, whining that they are “smashing the economy” by their decision not to cut interest rates,’ Mr Pape wrote.

Mr Pape pointed out the United States, the United Kingdom and New Zealand had all raised rates higher than Australia, even though it was hurting their economies. 

He likened the Reserve Bank’s actions to those of a doctor removing ‘a  cancerous melanoma’ in the form of inflation even though he agreed with Dr Chalmers that interest rates were hurting the economy.

However, like a doctor removing a melanoma the temporary pain of higher rates was in the service of achieving a greater good, so Ms Bullock had done the ‘ballsy thing’ in admitting the pain it was going to cause. 

However, political ‘spin doctor’ Dr Chalmers could make no such admission, especially with an election coming up, Mr Pape said.

He advised those suffering ‘heart palpitations’ at the thought of sustained higher rates that it was time to get a ‘financial check-up’. 

In his environment of higher rates, Mr Pape said some people just could not afford the home loans they had taken out

Earlier this month Ms Bullock declared a rate cut was unlikely during the next six months.

‘I understand that this is not what people want to hear,’ she told reporters.

‘I know there are many households and small businesses that are struggling with interest rates where they are – many people are doing it tough and we’re very conscious of that.

‘We can’t let inflation get away – it hurts everyone; it particularly hurts people on lower incomes, this is why we need to stay the course on bringing down inflation.’